MRRT delivered embarrassingly little: Senator Cormann

The federal government will not reveal revenue generated by the minerals resource rent tax because the scheme cost taxpayers more than $50 million to set up but has delivered embarrassingly little, Coalition Senator
Mathias Cormann
claimed in a fresh attack on Friday.

Senator Cormann said responses to parliamentary questions on notice showed MRRT-related administration and implementation expenses had reached more than $50 million since 2010.

Responding, a spokesman for the prime minister said the monthly financial statements already included aggregate figures for the MRRT and the petroleum resource rent tax, set up in 1987.

But Senator Cormann and The Greens want disaggregated figures.

Senator Cormann said answers to questions on notice put to the government by himself and fellow Coalition MP
Barnaby Joyce
showed Treasury had more than $50 million on setting up and administering the tax so far.

One response from Treasury dated October 18, 2012 says the operating cost of implementing and administering new resource tax arrangements is estimated to be $60.48 million over the financial years 2010-11 to 2012-13.

But this includes some work done to extend the petroleum resource rent tax, which has been in place for some time.

A second response to a question by Senator Joyce puts the cost of PRRT-related activities at $3.6 million for the year ended June 30, 2010.

By subtracting two years of PRRT expenses from the $60.48 estimate for overall resources rent tax-related expenses since 2010, Senator Cormann comes up with what he says is a conservative estimate of $50 million in costs for the Australian Tax Office.

In November, the Association of Mining and Exploration Companies, representing smaller players, wrote to Senator Cormann with an estimate of MRRT-related administration and compliance costs for members.

“Based on direct and anecdotal feedback from members, AMEC conservatively estimates that the minimum total set-up costs in the first year for smaller iron ore and coal miners and junior exploration companies (excluding large miners) is estimated to be over $20 million, and an ongoing annual administration and compliance cost in excess of $2 million," said a letter signed by chief executive Simon Bennison.

“It should be noted that the major proportion of these companies are not expected to have an MRRT liability and, in many cases, may never become an income-producing miner."

The companies have to keep full accounts in case they do make a viable discovery or are taken over by a larger miner, in which case the purchaser will want to offset its MRRT-related expenses.